Confidence in the UK housing market weakens amid the economic uncertainty 

Tuesday, 01 November 2011  

More people in the UK expect house prices to fall rather than rise over the next year, according to the latest Halifax Housing Market Confidence tracker.

Some 30% predict that the national average house price will decline over the next twelve months. However, this is only marginally more than the 28% that forecast a price rise over same the period, suggesting an evidently polarised outlook towards the market.

Halifax said that the headline House Price Outlook balance has slipped into negative territory with an overall balance score of -2 percentage points (28% minus 30%) compared with the positive reading of +9 (32% expecting a rise minus 23% expecting a fall) recorded in April's survey.
 
The majority of respondents expect any change in house prices over the next year to be relatively modest with 57% expecting any movement to be between plus 5% and minus 5%. Some 27% think that house prices will be unchanged in a year’s time.
 
There is a clear North/South divide regarding the outlook for house prices over the next twelve months. The only three UK regions where more people expect house prices to rise rather than fall are in southern England.

Londoners are most optimistic with an overall net balance of +13, followed by the South West (+3) and the South East (+1). In contrast, those living in Scotland are the most pessimistic about the outlook for house prices (-17).

Job insecurity and raising a deposit are seen as the main obstacles to home buying. Over half, 57%, cited concerns over job security as one of the main obstacles to buying a home, up five points on April. A quarter, 25%, also identified worries over household finances as a key barrier to house purchase, down six points.
 
Current conditions in the UK mortgage market continue to weigh on buyers with 57% believing that concerns over being able to raise a deposit are a major barrier to home buying.

However, more people believe that it is currently a buyer's market with 53% of all respondents thinking that it is currently a good time to buy. This is more than four times the proportion thinking that it is a good time to sell. These sentiments have hardened significantly over the past six months.
 
Now, only 9% of adults, and the same proportion of owner occupiers, think the next twelve months will be a good time to buy and a good time to sell.
 
‘It is unsurprising that confidence in the housing market has been shaken a little over the last few months given the increasing uncertainty about the current economic environment, together with pressure on householders' finances from weak earnings growth, higher inflation and tax rises,’ said Martin Ellis, housing economist at Halifax.

‘However, despite this deterioration in sentiment, record low interest rates continue to help to support the market. House prices nationally have changed little overall since the start of the year and we expect little change in both prices and activity over the next few months,’ he added.

The research also found that owner occupiers are more pessimistic about the prospects for the housing market than the public as a whole. Some 33% of existing homeowners think that the national average price will be lower in 12 months time compared with 26% who think that it will be higher, a net balance of -7 percentage points and worse than the +5 recorded in April.
 
Also 80% of owner occupiers think the next 12 months would be a bad time to sell, up 16 points since April, and 58% think it would be a good time to buy.

As far as the rental market is concerned some 66% of adults think that private rents will rise over the next 12 months, compared to just 3% who believe that rents will fall. Private renters share similar sentiments at 69% and 5% respectively.